Greg Hinz On Politics

The bond-rating agency that Mayor Rahn Emanuel loves to hate has just added a little fuel to his fire.

In a new report released late yesterday, Moody's Investors Service pretty much rips something the mayor has been crowing about as a big triumph, the override of a Gov. Bruce Rauner's veto of a measure refinancing the city's cash-short police and fire pension funds.

While Emanuel has emphasized that the bill will save city taxpayers $220 million this year by giving the city an additional 15 years—until 2055—to bring the funds into balance, Moody's is more worried about the long-run cost of that delay.

Kicking off the full-funding deadline means that unfunded liability in the funds will grow for another 20 years, moving from about $11 billion now to more than $14 billion, it says, money that eventually will have to be paid.

The report by Moody's, which has been the most negative of the major ratings agencies in recent years, pretty much echoes the argument Rauner made in insisting that the city is just "kicking the can down the road."

Moody's says its numbers are based on city-supplied data, and it has a point about returns in the city's four pension funds, which in 2015 ranged "between -1.5 percent and 1.8 percent, well below the plans' assumed annual returns of 7.5 percent of 8 percent."

But the agency only notes in passing that Emanuel last year pushed through the largest property tax hike in city history, $543 million, solely to fund police and fire pension liabilities. There are only so many places to get such money, and Moody's clearly would like more.

I'll pass on formal city reaction when I get it. But it's clear Chicago isn't out of the financial woods yet.

Update: 12:15 p.m.

Emanuel indeed is not very happy.

From a statement:

“Let's address what Moody's fails to acknowledge, and that's what the Emanuel administration has accomplished in less than four years to solve fiscal challenges that had built up over 40 years: established long-term plans with sustainable revenue for three of our four pension funds; cut the city's structural deficit from $654 million to $233 million, with plans to get it to zero by the end of 2019; fixed the liquidity crisis caused by Moody's; and ending the financial engineering that masks the true costs of government. So we refuse to apologize for not asking Chicagoans to take on another $800 million in property taxes just because Moody's feels that we are not moving fast enough. At the end of the day, not overburdening our residents takes priority over appeasing Moody's, which seems to have a desire to hurt Chicago, rather than help it thrive.”

C'mon, mayor. Tell us what you really think of Moody's.

Update: 1:45 p.m.

While Emanuel may not like Moody's much, Cook County Board President Toni Preckwknkle ought to.

Moody's this afternoon raised its outlook on county debt from negative to stable, with an overall A2 rating. It specifically noted Preckwinkle's recent penny-on-the-dollar hike in the county's sales tax, which is largely dedicated to pension needs.

Of course, unmentioned is that the move, when combined with levies by other governments, gives much of Chicago the highest sales tax in the country. But hey, they can eat cake . . . in Indiana.